SARS decided to stop the abuse of the de minimis rule. In international trade, this rule refers to a threshold below which certain goods are exempt from customs duties, taxes or other import restrictions. In South Africa, this threshold is/was R500, and it resulted in South Africans being able to purchase clothing items at lower prices.
The 45 import tax is the same rate paid by retailers. South African stakeholders in the textile industry argue that companies like Shein and Temu should also pay this rate on imports with a rand value below the de minimis threshold. One might wonder why they do not advocate for lower taxes to create a level playing field, instead of advocating for a high tax rate that would result in higher prices for South Africans.
To appreciate the injustice of policy decisions like the one Sars is implementing, one must understand the nature of trade and why seeking to protect local industries by increasing taxes on imports - which is the essence of protectionism - is misguided.
The beauty of commerce lies in its foundation of voluntary associations between individuals. The essence of all trade is the willingness of two or more parties to engage with each other to exchange goods. The voluntary nature of trade dictates that all trades, regardless of how they may appear to a third party, are fair and beneficial to all parties involved. Understanding this is crucial for recognising the injustice of attempting to dictate whom one should or shouldnt trade with, or under which conditions.
Despite substantial theoretical and empirical evidence against protectionism, it is still frequently utilised by the state - either as a means to raise more revenue or to achieve some form of political victory by 'supporting" local industries, as has been the case among politicians, even in the largest economy in the world, the US.
